BETTER THAN OBAMACARE

One Way to Manage Medical Costs

You Can’t Hit What You Don’t Aim At

The primary issue people had with health care was that it was too expensive.  Sure, insurance can help to lower costs to the individual, but it doesn’t actually lower the cost of medicine.  A significant issue is that you can’t cost compare as you might when you buy anything else, from a new phone to a car.  We don’t typically know what a procedure will cost, whether it’s a lab test or major surgery.  Even asking your doctor won’t help.  In many cases, they won’t know.  The one exception—when insurance doesn’t cover it, such as plastic surgery.  Plastic surgery, as well as a few other optional procedures, allows you to shop around.  Competition makes it more likely that prices will be reasonable as people compete for your business.

Obamacare was envisioned as universal health insurance.  Even when making it more affordable, it didn’t actually move the needle on health costs.  It just made them even less transparent.  And if you weren’t terribly poor or covered by employer insurance, Obamacare had nasty surprises for the self-employed.  My insurance premiums tripled and the deductible became unaffordable, ($6800 at the end).  And I was looking at the lowest cost option I could find.  All that existed for us running businesses was catastrophic policies at premium prices.  This might have been a start, but it didn’t really solve anything.

What Drives up Costs?

When a doctor graduates finally from medical school, he/she is likely to have incurred tremendous costs.  In most cases, the doctor still has to intern and do a residency, generally with a poverty-level wage with hours most of us couldn’t conceive.  If this new practitioner wants to set up an office, rent and equipment begin to run up costs and that’s before you hire a few people to manage your business.  This would be daunting enough, but malpractice insurance, (a requirement), can be incredibly costly, depending on your specialty.  Ever wonder why there are fewer OBs?  They often get hit with malpractice suits even as they’ve done nothing wrong, so insurance companies hit them hard.  The office and insurance costs, plus repaying school debt—all cost money before the doctor earns a single dollar.  Doctors don’t actually net the kind of salaries you think they do.  These costs are steep.

Another factor is the availability of amazing treatments and tests. CAT scans used to be esoteric and now are used routinely.  We have the best of the best and it is over-used for a variety of reasons.  One is defensive medicine.  Doctors faced with frivolous malpractice cases make sure they’ve done every test and made sure every “I” is dotted to avoid a nasty situation with a medically-inept attorney.  The other problem is customer demand.  We want the best, and when the costs are somewhat hidden from us through insurance, we demand more.  None of it is free.

When the cost of practicing is so high, many graduates opt for specialties, which tend to reap higher salaries. We have a dire shortage in primary care physicians who can handle a wide variety of medical problems.  In fact, so can nurse practitioners, usually at lower cost.  (I use an NP for most of my health issues).  When you can’t get in to see primary care, most opt for the more costly specialist. 

There are other causes, but these are some of the most concerning.  We don’t know the real cost, can’t comparison-shop and thus, medical spending is crazy.  If we could doctor-shop or hospital-shop, prices would come down and we would put an end to the nasty surprise at the end of a serious illness.  But right now, we can’t get this done.

An Option for Primary Care

A new option, available in various places, is direct primary care.  You pay a flat monthly fee that covers all in-office services and tests.  1400 offices exist in 49 states and the rates are pretty reasonable.  For this, no health insurance is required and the groups practicing this way have equipped their offices with equipment to do a lot of testing. 

If lab work is required, you basically pay a wholesale price, the price your doctor would pay the lab for work.  The doctors work with labs to make prices affordable for the uninsured…and the insured who want to manage costs.  What makes it affordable is that the doctor bills the lab monthly, no coding required and no extra paperwork, which eliminates a lot of the labor to process the paperwork.  Most traditional offices spend a fortune keeping up with the required paperwork and complex computer systems.

In a way, this is how car insurance works.  You don’t get your oil changes or other basic maintenance paid for by insurance.  That’s why the cost is affordable.  You have it for the big costs, such as when your car is totaled or someone is injured.  That’s how health insurance should work.  Pay out of pocket a reasonable sum for the day-to-day services, having catastrophic insurance for heart attacks, cancer and the like.  This kind of insurance traditionally was affordable by almost anyone.  We all work to find deals on car repairs; we can do the same with primary care and opt to work with one of these new direct pay offices where we know upfront the costs.

By combining these options, you create an affordable health care system.  And the options are growing.  It would be a great way to convert Medicare too.  But there are a lot regulatory barriers and laws which need to change to make this work everywhere  and more easily.

For many years, doctors and hospitals competed on quality of care and service, but never on price.  By introducing effective price competition, you can have it all—quality, service and affordable pricing.  It’s working now in those 1400+ places (new ones open regularly).  Why not test out this experiment?  We know the existing, government-run one isn’t working.